Microwave Facilities Operating in 1850-1990 MHz (2GHz) Band; Relocation Costs Sharing

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 15, 22, 24, and 101

[WT Docket No. 95-157; RM-8643; FCC 96-196]

Microwave Facilities Operating in 1850-1990 MHz (2GHz) Band;

Relocation Costs Sharing

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: By this First Report and Order, the Commission changes and

clarifies certain aspects of the microwave relocation rules adopted in

our Emerging Technologies proceeding, ET Docket No. 92-9. The

Commission also adopts a plan for sharing the costs of relocating

microwave facilities currently operating in the 1850 to 1990 MHz (``2

GHz'') band, which has been allocated for use by broadband Personal

Communications Services (``PCS''). The Commission's plan establishes a

mechanism whereby PCS licensees that incur costs to relocate microwave

links receive reimbursement for a portion of those costs from other PCS

licensees that also benefit from the resulting spectrum clearance. The

Commission conditions the cost-sharing plan, however, on selection of

one or more entities or organizations to administer the plan.

EFFECTIVE DATES: Sections 15.307 and 22.602 are effective August 12,

1996.

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Sections 24.5, 24.237, 24.238, 24.239, 24.241, 24.243, 24.245, 24.247,

24.249, 24.251 and 24.253 will become effective August 12, 1996, and

will become applicable on the date that the Wireless Telecommunications

Bureau selects a clearinghouse to administer the cost-sharing plan. The

Commission will publish a document announcing the selection of the

clearinghouse at a later date. Sections 101.3, 101.69, 101.71, 101.73,

101.75, 101.77, 101.79, 101.81, and 101.147 will become effective

August 1, 1996.

FOR FURTHER INFORMATION CONTACT: Michael Hamra (202) 418-0620, Wireless

Telecommunications Bureau.

SUPPLEMENTARY INFORMATION: This is a synopsis of the First Report and

Order, adopted April 24, 1996 and released April 30, 1996. For

information regarding the proposed plan for sharing the costs of

microwave relocation, see Amendment to the Commission's Rules Regarding

a Plan for Sharing the Costs of Microwave Relocation, Notice of

Proposed Rule Making, WT Docket No. 95-157, 60 FR 55529 (November 1,

1995) (``Cost-Sharing Notice''). Part 101 will become effective August

1, 1996. See 61 FR 26670 (May 28, 1996). The complete text of this

First Report and Order is available for inspection and copying during

normal business hours in the FCC Reference Center, Room 230, 1919 M

Street, N.W., Washington, D.C., and also may be purchased from the

Commission's copy contractor, International Transcription Service, at

(202) 857-3800, 2100 M Street, N.W., Suite 140, Washington, D.C. 20037.

I. Background

1. In the First Report and Order and Third Notice of Proposed Rule

Making in ET Docket No. 92-9, 57 FR 49020 (October 29, 1992) the

Commission reallocated the 1850-1990, 2110-2150, and 2160-2200 MHz

bands from private and common carrier fixed microwave services to

emerging technology services. The Commission also established

procedures for 2 GHz microwave incumbents to be relocated to available

frequencies in higher bands or to other media, by encouraging

incumbents to negotiate voluntary relocation agreements with emerging

technology licensees or manufacturers of unlicensed devices when

frequencies used by the incumbent are needed to implement the emerging

technology. The First Report and Order stated that, should negotiations

fail, the emerging technology licensee could request involuntary

relocation of the incumbent, provided that the emerging technology

service provider pays the cost of relocating the incumbent to a

comparable facility. In the Commission's Third Report and Order in ET

Docket No. 92-9, 58 FR 46547 (September 2, 1993) as modified on

reconsideration by the Memorandum Opinion and Order, 59 FR 19642 (April

25, 1994) the Commission established additional details of the

transition plan to enable emerging technology providers to relocate

incumbent facilities. The relocation process consists of two

negotiation periods that must expire before an emerging technology

licensee may request involuntary relocation. The first is a fixed two-

year period for voluntary negotiations--three years for public safety

incumbents, e.g., police, fire, and emergency medical--commencing with

the Commission's acceptance of applications for emerging technology

services, during which the emerging technology providers and microwave

licensees may negotiate any mutually acceptable relocation agreement.

Negotiations are strictly voluntary. If no agreement is reached, the

emerging technology licensee may initiate a one-year mandatory

negotiation period--or two-year mandatory period if the incumbent is a

public safety licensee--during which the parties are required to

negotiate in good faith.

2. Should the parties fail to reach an agreement during the

mandatory negotiation period, the emerging technology provider may

request involuntary relocation of the existing facility. Involuntary

relocation requires that the emerging technology provider (1) guarantee

payment of all costs of relocating the incumbent to a comparable

facility; (2) complete all activities necessary for placing the new

facilities into operation, including engineering and frequency

coordination; and (3) build and test the new microwave (or alternative)

system. Once comparable facilities are made available to the incumbent

microwave operator, the Commission will amend the 2 GHz license of the

incumbent to secondary status. After relocation, the microwave

incumbent is entitled to a one-year trial period to determine whether

the facilities are indeed comparable, and if they are not, the emerging

technology licensee must remedy the defects or pay to relocate the

incumbent back to its former or an equivalent 2 GHz frequency.

3. Under these procedures, it is possible for a relocation

agreement between a PCS licensee and a microwave incumbent to have

spectrum-clearing benefits for other PCS licensees as well. First, some

microwave spectrum blocks overlap with one or more PCS blocks, because

the spectrum in the 1850-1990 MHz band was assigned differently in the

two services. Second, incumbents' receivers may be susceptible to

adjacent or co-channel interference from PCS licensees in more than one

PCS spectrum block. For example, a microwave link located partially in

Block A, partially in Block D, and adjacent to Block B, may cause

interference to or receive interference from PCS licensees that are

licensed in each of those blocks. Third, because most 2 GHz microwave

licensees operate multi-link systems, PCS licensees may be asked to

relocate links that do not directly encumber their own spectrum or

service area in order to obtain the microwave incumbent's voluntary

consent to relocate. Finally, the Unlicensed PCS Ad Hoc Committee for 2

GHz Microwave Transition and Management Inc. (``UTAM''), the frequency

coordinator for the PCS spectrum designated for unlicensed devices,

expects that some licensed PCS providers will have to relocate links in

the unlicensed band that are paired with links in licensed PCS

spectrum. The Commission has designated UTAM to coordinate relocation

in the 1910-1930 MHz band, which has been reallocated for unlicensed

PCS devices. Once the 1910-1930 MHz band is clear, or there is little

risk of interference to the remaining incumbents, and UTAM has

recovered its relocation costs, UTAM's role will end and it will be

dissolved.

4. Because the Commission is licensing PCS providers at different

times and multiple PCS licensees may benefit from the relocation of a

microwave system or even a single link, the first PCS licensee in the

market potentially bears a disproportionate share of relocation costs.

Subsequent PCS licensees to enter the market may therefore obtain a

windfall. As a result of this potential ``free rider'' problem, the

first PCS licensee in the market might not relocate a link or might

delay its deployment of PCS if it believes that another PCS licensee

will relocate the link first, thus paying for some or all of the

relocation costs. In addition, unless cost-sharing is adopted, PCS

licensees might not engage in relocation that is cost-effective if

viewed from an industry-wide perspective. For example, a link that

encumbers two PCS blocks might not be moved if the cost is greater than

the benefit to any single licensee, even though the joint benefit

received by two or more licensees exceeds the cost of relocating the

link.

5. In 1994, PCIA proposed a cost-sharing plan to alleviate the free

rider problem, which the Commission found to be attractive in theory

but dismissed

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as underdeveloped. On May 5, 1995, Pacific Bell (``PacBell'') filed a

Petition for Rulemaking. In its petition, PacBell proposed a detailed

cost-sharing plan in which PCS licensees on all blocks, licensed and

unlicensed, would share in the cost of relocating microwave stations.

On May 16, 1995, the Commission requested comment on PacBell's

proposal. Most parties that commented on PacBell's Petition for

Rulemaking supported the cost-sharing concept, although the comments

reflected some differences regarding the details of the proposal. On

October 12, 1995, the Commission adopted a Notice of Proposed Rule

Making, 60 FR 55529 (November 1, 1995) which sought comment on a

modified version of the plan proposed by PacBell.

6. The Commission released and adopted, with this First Report and

Order, a Further Notice of Proposed Rule Making, 61 FR 24470 (May 15,

1996).

II. First Report and Order

7. In the Cost-Sharing Notice, the Commission proposed a number of

changes and clarifications to the microwave relocation rules adopted in

the Emerging Technologies docket. The Commission suggested that

additional guidance with respect to certain aspects of its rules would

facilitate negotiations, reduce disputes, and expedite deployment of

PCS. As explained below, the Commission adopts many of the changes and

clarifications the Commission proposed, along with some suggestions

made by commenters. By adopting these rule changes and clarifications,

as well as the cost-sharing plan discussed in Section B, infra, the

Commission intends to expedite the clearing of the 2 GHz band and the

introduction of PCS to the public, while protecting the rights of

incumbents. The Commission seeks to promote an efficient and equitable

relocation process, which minimizes transaction costs and maximizes

benefits for all parties, including incumbents, PCS licensees, and the

public.

A. Microwave Relocation Rules

1. Voluntary Negotiations

8. The Commission agrees with commenters who argue that the public

interest would not be served by changing the rules regarding the

voluntary period for the A and B blocks at this time. First, the A and

B block licensees who are now negotiating with incumbents were on

notice of the voluntary period when they bid for their licenses, and

they presumably have factored the length of the period and the

potential cost of relocation into their bids. They have offered no

persuasive justification to shorten the period now. Second, the

Commission notes that many voluntary agreements have already been

reached or are now being negotiated between A and B block licensees and

incumbents. The Commission is concerned that altering the voluntary

period could inadvertently delay the deployment of PCS, because

negotiations are likely to be interrupted while parties reassess their

bargaining positions. Nevertheless, the Commission agrees with PCS

licensees that changing the negotiation period for blocks other than

the A and B blocks may not raise the same concerns, because

negotiations in these blocks have not commenced.

9. Whether or not the negotiation periods are changed, the

Commission also agrees with PCS licensees that additional information

about the value of an incumbent's system, the estimated amount of time

it would take to relocate the incumbent, and the anticipated cost of

relocation may help facilitate negotiations during the voluntary

period, as the Commission suggested in the Cost-Sharing Notice.

Therefore, the Commission will require that, if the parties have not

reached an agreement within one year after the commencement of the

voluntary period, the incumbent must allow the PCS licensee, if the PCS

licensee so chooses, to gain access to the microwave facilities to be

relocated so that an independent third party can examine the

incumbent's 2 GHz system and prepare an estimate of the cost and the

time needed to relocate the incumbent to comparable facilities. The PCS

licensee must pay for any such cost estimate. Because the one-year

anniversary of the commencement of the voluntary period for A and B

block licensees has already passed, this requirement shall become

effective for the A and B block on the effective date of the rules

adopted in this proceeding. The Commission disagrees with incumbents

that a cost estimate paid for by the PCS licensee changes the nature of

the voluntary period, because participation in negotiations remains

voluntary.

10. Finally, although the Commission is not altering the basic

structure or length of the voluntary period for A and B block PCS

licensees, the Commission emphasizes that its rules provide incentives

for voluntary agreements. The Commission has stated in the past that

PCS licensees may choose to offer incumbents premiums to relocate

quickly. ``Premiums'' could include: replacing the analog facilities

with digital facilities, paying all of the incumbent's transactions

costs, or relocating an entire system as opposed to just the

interfering links. These incentives are available only to microwave

incumbents who consent to relocation by negotiation. By contrast, PCS

licensees are not obligated to pay for such premiums during an

involuntary relocation, which is discussed in Section IV(A)(3), infra.

2. Mandatory Negotiations

11. As the comments on this issue demonstrate, the question of

whether parties are negotiating in good faith typically requires

consideration of all the facts and circumstances underlying the

negotiations, and thus is likely to depend on the specific facts in

each case. The Commission is concerned that creating a presumption that

a party is acting in good or bad faith, as proposed in the Cost-Sharing

Notice, may slow down resolution of disputes by prompting parties to

bring claims of bad faith to the Commission prematurely rather than

focusing on resolving the underlying disputes through the negotiation

process. For these reasons, the Commission declines to adopt its

proposal creating a presumption that a party who declines an offer of

comparable facilities is acting in bad faith. Instead, the Commission

concludes that good faith should be evaluated on a case-by-case basis

under basic principles of contract law. Nevertheless, the Commission

agrees with those commenters who suggest that guidance with respect to

the factors the Commission will consider if a dispute arises over good

faith would be helpful.

12. First, the Commission believes that good faith requires each

party to provide information to the other that is reasonably necessary

to facilitate the relocation process. For example, upon request by a

PCS licensee, the Commission expects incumbents to allow inspection of

their facilities by the PCS licensee and to provide any other

information that the PCS licensee needs in order to evaluate the cost

of relocating the incumbent to comparable facilities. Second, when

evaluating claims that a party has not negotiated in good faith, the

Commission will consider, inter alia, the following factors: (1)

whether the PCS licensee has made a bona fide offer to relocate the

incumbent to comparable facilities; (2) if the microwave incumbent has

demanded a premium, the type of premium requested (e.g., whether the

premium is directly related to relocation, such as system-wide

relocations and analog-to-digital conversions, versus other types of

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premiums) and whether the value of the premium as compared to the cost

of providing comparable facilities is disproportionate (i.e., whether

there is a lack of proportion or relation between the two); (3) what

steps the parties have taken to determine the actual cost of relocation

to comparable facilities; and (4) whether either party has withheld

information requested by the other party that is necessary to estimate

relocation costs or to facilitate the relocation process.

13. To ensure that parties do not bring frivolous bad faith claims,

the Commission will also require any party alleging a violation of the

Commission's good faith requirement to provide an independent estimate

of the relocation costs of the facilities in question. Independent

estimates must include a specification for the comparable facility and

a statement of the costs associated with providing that facility to the

incumbent licensee. These cost estimates are similar to the cost

estimates that the Commission requires if a dispute arises over

comparable facilities during the involuntary relocation period. The

Commission believes that requiring such estimates will assist them in

determining whether the parties are negotiating in good faith. Finally,

the Commission agrees with those commenters who argue that penalties

for failure to negotiate in good faith should be imposed on a case-by-

case basis. The Commission emphasizes, however, that they intend to use

the full realm of enforcement mechanisms available to them in order to

ensure that licensees bargain in good faith.

3. Involuntary Relocation

14. If no agreement is reached during either the voluntary or

mandatory negotiation period, a PCS licensee may initiate involuntary

relocation procedures. Under involuntary relocation, the incumbent is

required to relocate, provided that the PCS licensee meets the

conditions under the Commission's rules for making the incumbent whole,

such as providing the incumbent with comparable facilities.

a. Comparable Facilities

15. The Commission concludes that the factors they have

identified--communications throughput, system reliability, and

operating costs--will be the three factors used to determine when a

facility is comparable. As the Commission stated in the Cost-Sharing

Notice, the Commission believes that providing guidance with respect to

the term comparable facilities will facilitate negotiations and reduce

disputes. The record in this proceeding also supports adoption of the

factors the Commission has identified. Each factor is discussed in more

detail below.

16. Communication Throughput. The Commission defines communications

throughput as the amount of information transferred within the system

in a given amount of time. For analog systems the throughput is

measured by the number of voice channels, and for digital systems it is

measured in bits per second (``bps''). Therefore, if analog facilities

are being replaced by analog facilities, the PCS licensee will be

required to provide the incumbent with an equivalent number of 4 kHz

voice channels. If an existing digital system is being replaced by

digital facilities, the PCS licensee will be required to provide the

incumbent with equivalent data loading bps in order for the system to

be considered comparable. The Commission agrees with commenters that

the more difficult issue will be determining equivalent throughput when

analog equipment is being replaced with digital equipment, which can be

like comparing ``apples with oranges.'' If disputes arise, the

Commission will determine on a case-by-case basis whether comparable

throughput has been achieved. For guidance, the Commission plans to

refer to other parts of its rules where analog-digital comparisons have

been made, such as the minimum channel loading requirements for fixed

point-to-point microwave systems in Section 21.710(d).

17. The Commission also concludes that, during involuntary

relocation, PCS licensees will only be required to provide incumbents

with enough throughput to satisfy their needs at the time of

relocation, rather than to match the overall capacity of the system, as

some microwave incumbents suggest. For example, the Commission will not

require that a 2 GHz incumbent with 5 MHz of bandwidth be relocated to

a 5 MHz bandwidth, 6 GHz location when its current needs only justify a

1.25 MHz bandwidth system. If a dispute arises, the Commission will

determine what an incumbent's needs are by looking at actual system use

rather than total capacity at the time of relocation. The Commission

expressly adopted channelization plans for the 6 GHz band with

bandwidth requirements ranging from 400 kHz to 30 MHz to increase the

efficiency of use by point-to-point microwave operations. Although the

Commission recognizes that this policy may affect an incumbent's

ability to increase its capacity over time, the Commission agrees with

PCS licensees that the public interest would not be served if spectrum

is automatically held in reserve for all incumbents with the

expectation that some may require additional capacity in the future.

The Commission's goal is to foster efficient use of the spectrum, which

would be thwarted if all incumbents are relocated to systems with

capacity that exceeds their current needs. Also, limiting spectrum to

current needs serves the public interest, because the Commission

believes that it will promote the development of spectrum-efficient

technology capable of increasing capacity without increasing bandwidth.

18. Reliability. The Commission defines system reliability as the

degree to which information is transferred accurately within the

system. As stated in the Cost-Sharing Notice, the reliability of a

system is a function of equipment failures (e.g., transmitters, feed

lines, antennas, receivers, battery back-up power, etc.), the

availability of the frequency channel due to propagation characteristic

(e.g., frequency, terrain, atmospheric conditions, radio-frequency

noise, etc.), and equipment sensitivity. The Commission defines

comparable reliability as that equal to the overall reliability of the

incumbent system, and the Commission will not require the system

designer to build the radio link portion of the system to a higher

reliability than that of the other components of the system. For

example, if an incumbent system had a radio link reliability of 99.9999

percent, but an overall reliability of only 99.999 percent because of

limited battery back-up power, the Commission requires that the new

system have a radio link reliability of 99.999 percent to be considered

comparable. For digital data systems this would be measured by the

percent of time the bit error rate (``BER'') exceeds a desired value,

and for analog or digital voice transmissions this would be measured by

the percent of time that audio signal quality met an established

threshold. Under this approach, for a replacement digital system to be

comparable, the data rate throughput must be equal to or greater than

that of the incumbent system with an equal or greater reliability. If

an analog voice system is replaced with a digital voice system the

resulting frequency response, harmonic distortion, signal-to-noise

ratio, and reliability would be the factors considered. The Commission

declines to adopt AUE's request that the Commission include a ``system

age'' component that takes into account how the age of a given system

can affect system reliability, because the

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Commission does not have enough information to determine how age will

affect a given system. Moreover, the Commission believes that older

equipment of high quality may be as reliable as newer equipment of low

quality.

19. Operating Costs. The Commission defines operating costs as the

cost to operate and maintain the microwave system. These costs fall

into several categories. First, the incumbent must be compensated for

any increased recurring costs associated with the replacement

facilities (e.g., additional rental payments, increased utility fees).

Although the Commission originally proposed that recurring costs should

be limited to a ten-year license term, the Commission is persuaded by

PCS licensees that a five-year time period--which is the length of a

microwave license in the 1850-1990 MHz band--is a more appropriate time

frame, because it strikes an appropriate balance between the burden

placed on PCS licensees who must relocate many incumbents, and the

burden placed on incumbents that are being forced to relocate.

Furthermore, the Commission believes that the five-year time period is

not unfair to incumbents because, by five years from now, many

incumbents would have been forced to bear some of these costs

themselves--such as increased rents--if they had not already been

relocated by PCS licensees. Moreover, the Commission is also persuaded

that a five-year time period provides incumbents with sufficient time

for budget planning and resource allocation to meet such expenses once

the five-year period expires. Finally, the Commission concludes that a

PCS licensee is permitted but not required to satisfy its obligation by

making a lump-sum payment based on present value using current interest

rates, as suggested by some incumbents.

20. Second, increased maintenance costs must be taken into

consideration when determining whether operating costs are comparable.

As several commenters point out, maintenance costs associated with

analog systems are frequently higher than the costs for equivalent

digital systems, because manufacturers are producing mostly digital

equipment and analog replacement parts can be difficult to find. The

Commission declines to adopt API's suggestion that ``serviceability''--

which would require that access to those elements essential to

restoration of service be equal to or greater than the original

system--should be adopted as a fourth element, however, because the

Commission believes that the ease of servicing the equipment will

affect repair costs, which will be factored into operating costs.

Furthermore, the Commission agrees with incumbents that, in some

instances, the operating costs of 6 GHz analog equipment might be so

high that analog replacement facilities would not qualify as

comparable. On the other hand, if an available analog replacement

system would provide equivalent technical capability without increasing

the incumbent's operating costs or sacrificing any of the other factors

the Commission has identified, the Commission agrees with PCS licensees

that such an analog system would be acceptable. In sum, the

Commission's goal is to ensure that incumbents are no worse off than

they would be if relocation were not required, not to guarantee

incumbents superior systems at the expense of PCS licensees.

21. Trade Offs. The Commission also concludes that comparable

replacement facilities may not be provided by trading off any of the

system parameters discussed above. Thus, the Commission agrees with

incumbents that PCS licensees should not be permitted to compromise on

one aspect of comparability, such as system reliability, by

compensating with another factor, such as increased throughput. Based

on the record in this proceeding, the Commission believes that the

factors the Commission has identified are central to the concept of

comparability, and therefore the replacement system provided to an

incumbent during an involuntary relocation must be at least equivalent

to the incumbent's existing system with respect to system reliability,

throughput, and operating costs. However, other aspects of the system

(e.g., bandwidth) do not have to be equivalent to the incumbent's

original 2 GHz system. As PCS licensees point out, it might be possible

to achieve comparability with respect to the three main factors, even

though all of the features on the replacement equipment are not

identical to those of the original system. Other media, such as land

lines, would also be acceptable, provided that comparability is

achieved.

22. Depreciation. In the Cost-Sharing Notice, the Commission also

sought comment on whether and how depreciation of equipment and

facilities should be taken into account, and whether it would be

appropriate for a PCS licensee to compensate an incumbent only for the

depreciated value of the old equipment. Some PCS licensees contend that

depreciation should be taken into account during the mandatory period

as a means of encouraging incumbents to accept offers during the

voluntary period. The Commission is persuaded by incumbents, however,

that compensation for the depreciated value of old equipment would not

enable them to construct a comparable replacement system without

imposing costs on the incumbent, which would be inconsistent with the

Commission's relocation rules. The Commission therefore concludes that

the depreciated value of old equipment should not be a factor when

determining comparability.

b. Relocating Individual Links

23. The Commission affirms its decision in the 1994 Memorandum

Opinion and Order that PCS licensees are obligated to pay to relocate

incumbents to comparable facilities only with respect to the specific

microwave links for which their systems pose an interference problem.

Thus, the Commission clarifies that PCS licensees are not under an

obligation to move an incumbent's entire system at once, unless all of

the links in the incumbent's system would be subject to interference by

the PCS licensee. Although system-wide relocations may be preferable

and less disruptive to the incumbent, the Commission concludes that it

would be inappropriate to increase a PCS licensee's monetary

obligation, e.g., by requiring it to pay to relocate links that it

never intended to move, after the licenses have already been auctioned.

In fact, several commenters--particularly those bidding in the C block

auction--have stated in their comments that they are intentionally

designing their systems in such a way that existing links will not have

to be relocated. Moreover, incumbents are not harmed by this policy

because, as PCS licensees point out, many incumbents already operate

networks that consist of both 2 GHz and 6 GHz links or a combination of

digital and analog technology. Furthermore, the Commission's rules

protect microwave operations by requiring PCS licensees to provide

incumbents with a seamless transition from their old facilities to the

replacement facilities. Thus, if providing a seamless transition

requires it, PCS licensees must relocate additional links or pay for

additional costs associated with integrating the new links into the old

system, such as employing a different modulation technique to preserve

the system's overall integrity. If problems arise, the PCS licensee is

required under the Commission's rules to remedy the situation.

24. To ease the burden on incumbents, the Commission has adopted a

cost-sharing plan to promote

[[Page 29684]]

the relocation of all links in a system at the same time. By enabling

PCS licensees to collect reimbursement from subsequent licensees that

benefit from the relocation, the Commission believes that its cost-

sharing plan will promote a larger number of system-wide relocations.

c. Transaction Expenses

25. The Commission concludes that incumbents should be reimbursed

only for legitimate and prudent transaction expenses that are directly

attributable to an involuntary relocation, subject to a cap of two

percent of the ``hard'' costs involved (e.g., equipment, new towers,

site acquisition). Although the Commission proposed in the Cost-Sharing

Notice that PCS licensees should not be required to reimburse

incumbents for any ``extraneous'' expenses, such as fees for attorneys

and consultants, the Commission is persuaded by commenters that some

reimbursement for outside assistance is necessary, because not all

incumbents have expertise in these fields within their organizations.

The Commission concludes that PCS licensees are not required to pay

incumbents for internal resources devoted to the relocation process,

however, because such expenses are difficult to determine and would be

too hard for a PCS licensee to verify. Moreover, the benefits

incumbents receive as a result of relocation, such as superior

equipment, are likely to outweigh any internal costs they incur.

26. To prevent abuses, PCS licensees will not be required to

reimburse incumbents for transaction costs that exceed two percent of

the hard costs associated with an involuntary relocation. Rather than

adopt a cap on the dollar amount that can be spent on transaction

expenses, the Commission believes that a percentage of the total hard

costs, as suggested by Cox & Smith, is more appropriate. Therefore, if

complicated and costly actions, such as land acquisition, are required

to accomplish relocation, the permissible amount of reimbursement for

transaction costs would be higher. The Commission also believes that a

two-percent cap is reasonable and strikes a fair balance between the

concerns of PCS licensees and microwave incumbents. The Commission

derived two percent from CIPCO's suggested cap of $5,000 per link,

which is two-percent of $250,000--the amount the Commission has

determined to be the average cost of relocating a link. Furthermore,

PCS licensees will not be required to pay for transaction costs

incurred by incumbents during the voluntary or mandatory negotiation

periods once an involuntary relocation is initiated, nor will they be

required to pay for fees that cannot be legitimately tied to the

provision of comparable facilities, such as consultant fees for

determining how much of a premium payment PCS licensees would be

willing to pay. The Commission agrees with PCS licensees that they

should not have to reimburse incumbents for such fees, because it would

encourage incumbents to view the relocation process as a business

opportunity. Furthermore, requiring PCS licensees to pay such fees does

not serve the public interest, because added expenses are likely to be

passed on to the public in the form of increased PCS subscriber fees.

d. Twelve-Month Trial Period

27. As a preliminary matter, the Commission clarifies that the

twelve-month trial period is only automatic if an involuntary

relocation occurs. Therefore, if the parties decide that a trial period

should be established for relocations that occur during the voluntary

and mandatory period, they must provide for such a period in the

relocation contract.

28. Because our proposed clarifications to the twelve-month trial

period received broad record support, the Commission adopts the

following clarifications to Section 94.59(e) of our rules:

(1) The trial period will commence on the date that the incumbent

begins full operation (as opposed to testing) on the replacement link;

and

(2) An incumbent's right to a twelve-month trial period resides

with the incumbent as a function of the Commission's relocation rules,

regardless of whether the incumbent has previously surrendered its

license. If, however, a microwave licensee has retained its 2 GHz

authorization during the trial period, it is required to return the

license to the Commission at the conclusion of that period.

In Commission's initial rule, 47 CFR Sec. 94.59(c), the Commission

stated that they would convert the microwave incumbent to secondary

status after the replacement system is built and the microwave

incumbent has been provided with a reasonable amount of time to

determine comparability. The Commission sees no reason, however, for

the incumbent to retain its 2 GHz license once it has been relocated.

The Commission declines to adopt the suggestion that the Commission's

twelve-month trial period should be extended or begin again if a

problem arises. The Commission concludes that incumbents are adequately

protected without such an extension because, by the end of the twelve-

month period, the Commission's rules require that they be operating on

facilities that are comparable. If at the end of the twelve months the

PCS licensee has still failed to meet this requirement, it must

relocate the incumbent back to its former or equivalent 2 GHz

frequencies. Thus, the expiration of the twelve-month period does not

leave the incumbent without further recourse.

29. As a related matter, the Commission clarifies that, even after

the PCS licensee has initiated the involuntary relocation process, a

mutually acceptable agreement will still be permissible. If the parties

do sign an agreement specifying their own terms, the Commission will

treat the agreement in the same manner as the Commission treats

agreements that are consummated during the voluntary and mandatory

periods, and the parties will be bound by contract rather than our

rules. The Commission agrees with commenters that neither incumbents

nor PCS licensees are harmed by such a policy, because neither party is

obligated to enter into such an agreement. If the agreement falls

through, however, the incumbent will be subject to involuntary

relocation.

30. Finally, the Commission declines to reduce the trial period to

one month as suggested by PCS licensees. The Commission agrees with

incumbents that twelve months is an appropriate time period, because it

gives the incumbent the opportunity to ensure that the facilities

function properly during changes in climate and vegetation. The

Commission also takes this opportunity to clarify that PCS licensees

are not required to leave the incumbent's former 2 GHz spectrum vacant

during the twelve-month trial period. The Commission agrees with PCIA

that requiring PCS licensees to hold this spectrum in reserve would

delay the deployment of PCS for at least one year, which does not serve

the public interest. The Commission also clarifies that, if the

microwave incumbent demonstrates that the new facilities are not

comparable to the former facilities, the PCS licensee must remedy the

defects or pay to relocate the microwave licensee to one of the

following: its former or equivalent 2 GHz channels, another comparable

frequency band, a land-line system, or any other facility that

qualifies as comparable.

[[Page 29685]]

e. Request for Clarification of Involuntary Relocation Procedures

31. The Commission believes that AT&T Wireless, et al., have raised

legitimate issues regarding the procedures for implementing involuntary

relocation at the conclusion of the mandatory negotiation period. The

issues raised in their letter, however, were not included in the Cost-

Sharing Notice, nor were they raised in any of the regularly filed

comments or reply comments in this proceeding. Because of the relative

lateness of the parties' ex parte filing and the lack of opportunity

for other parties to comment, the Commission declines to address these

issues at this time. Nevertheless, the Commission encourages the

parties to the April 15 letter or any other interested parties to file

a petition for rulemaking on the issues raised in the letter.

4. Public Safety Certification

32. The Commission agrees with PCS licensees that certification is

necessary to ensure that only those public safety incumbents meriting

special status are allowed the advantages of extended negotiation

periods. The Commission also agrees with incumbents, however, that

self-certification is appropriate, because self-certification will not

burden public agencies with time-consuming reporting requirements. The

Commission declines to adopt the suggestion made by AT&T that all

public safety incumbents should be required to apply to the Commission

for certification, because such a requirement would be administratively

burdensome for the Commission and could delay negotiations.

Furthermore, the Commission believes that PacBell's concerns about

biased public agencies are overstated, because the Commission does not

believe public agencies will be inclined to falsify the certification.

33. The Commission concludes that, in order for a public safety

licensee to qualify for extended negotiation periods under the

Commission's rules, the department head responsible for system

oversight must certify to the PCS licensee requesting relocation that:

(1) The agency is a licensee in the Police Radio, Fire Radio,

Emergency Medical, Special Emergency Radio Services, or that it is a

licensee of other Part 94 facilities licensed on a primary basis under

the eligibility requirements of Part 90, Subparts B and C; and

(2) the majority of communications carried on the facilities at

issue involve safety of life and property.

A public safety licensee must provide certification within 30 days

of a request from a PCS licensee or the PCS licensee may presume that

special treatment is inapplicable to the incumbent. If an incumbent

falsely certifies to a PCS licensee that it qualifies for the extended

time periods, the incumbent will be in violation of the Commission's

rules and subject to appropriate penalties. Such an incumbent would

also immediately become subject to the non-public safety time periods.

5. Dispute Resolution

34. Because relocations that occur pursuant to agreements arrived

at during the voluntary and mandatory period are relocations pursuant

to private contracts, the Commission anticipates that parties will

pursue common law contract remedies if a dispute arises. Thus, if

parties do not agree to use alternative dispute resolution techniques,

the Commission expects that they will file suit in a court of competent

jurisdiction.

35. To the extent that disputes arise over violation of the

Commission's rules (e.g., the good faith requirement, involuntary

relocation procedures), the Commission has stated that parties are

encouraged to use ADR techniques. Commenters agree that resolution of

such disputes entirely by the Commission's adjudication processes would

be time consuming and costly to all parties. Therefore, the Commission

continues to encourage parties to employ ADR techniques when disputes

arise.

6. Ten Year Sunset

36. As the Commission stated in the Cost-Sharing Notice, the

Commission continues to believe that an emerging technology licensee's

obligation to relocate 2 GHz microwave incumbents should not continue

indefinitely; however, the Commission is also persuaded by incumbents

that immediate conversion to secondary status in the year 2005 may not

be necessary, especially with respect to rural links that would not

interfere with any PCS systems. To strike a fair balance between these

competing interests, the Commission concludes that 2 GHz microwave

incumbents will retain primary status unless and until an emerging

technology licensee requires use of the spectrum, but that the emerging

technology licensee will not be obligated to pay relocation costs after

the relocation rules sunset, i.e., ten years after the voluntary period

begins for the first emerging technology licensees in the service

(which is April 4, 2005, for PCS licensees and unlicensed PCS). Once

the relocation rules sunset, an emerging technology licensee may

require the incumbent to either cease operations or pay to relocate

itself to alternate facilities, provided that the emerging technology

licensee intends to turn on a system within interference range of the

incumbent, as determined by TIA Bulletin 10-F or any standard successor

thereto. Notification must be in writing, and the emerging technology

licensee must provide the incumbent with no less than six months to

vacate the spectrum. Emerging technology licensees may provide notice

prior to the date that the relocation rules sunset, but may not turn on

their systems until after that date. After the six-month notice period

has expired, the incumbent will be required to turn its 2 GHz license

back into the Commission, unless the parties have entered into an

agreement which allows the incumbent to continue to operate on a

mutually agreed upon basis. The Commission concludes that their

decision promotes spectrum efficiency, because it allows microwave

incumbents to continue to operate in the 2 GHz band until their

spectrum is needed by an emerging technology licensee.

37. The Commission believes that a sunset date for the Commission's

microwave relocation rules serves the public interest, because it

provides certainty to the process and prevents the emerging technology

licensee from being required to pay for relocation expenses

indefinitely. Moreover, the Commission agrees with commenters that ten

years provides incumbents with sufficient time (1) to negotiate a

relocation agreement or (2) to plan for relocation themselves. In fact,

well over ten years will have passed since the Commission first

announced our intention to reallocate 2 GHz spectrum to foster the

introduction of emerging technologies services in 1992. In other

services, the Commission has provided incumbents with even less time to

complete relocation. For example, private operational fixed microwave

stations in the 12 GHz band received only five years to relocate their

facilities before they became secondary to the Direct Broadcast

Satellite (``DBS'') Service.

38. The Commission also believes that adopting a sunset date is

important, because it will provide 2 GHz microwave incumbents with an

incentive to relocate to other bands when it comes time to change or

replace their equipment. At the current time, the Commission's

licensing records indicate that most 2 GHz microwave incumbents use

analog equipment. APCO contends that operating 2 GHz analog microwave

systems is becoming infeasible, because analog systems are

[[Page 29686]]

now outdated and replacement parts will soon be difficult, if not

impossible, to find. APCO also states that most incumbents have long-

term plans to replace their analog systems with digital systems once

the useful life of current equipment has expired and/or adequate

funding has been found. As BellSouth points out, by the time the sunset

date arrives, much of the microwave equipment operating today at 2 GHz

is likely to be either fully amortized or in need of replacement. The

Commission believes that informing 2 GHz incumbents that they will have

to cover their own relocation expenses after ten years will encourage

incumbents to relocate to another band when they replace existing

equipment. By contrast, if emerging technology licensees are required

to pay to relocate incumbents regardless of when the relocation occurs,

incumbents will have little incentive to make such a transition to an

alternate band voluntarily. For similar reasons, the Commission rejects

the argument by incumbents that PCS licensees should be required to

make relocation offers prior to the sunset date to all incumbents

located within their market area. Again, incumbents would have no

incentive to change out their own systems voluntarily if they knew that

PCS licensees would be required to cover the expenses for them at a

later date. Furthermore, even if the Commission had not reallocated the

spectrum, these incumbents would have had to plan ahead for repair

costs, replacement equipment, and infrastructure improvement. Given

that most incumbents will incur significant expenses in any event when

they replace their analog system with digital equipment, the Commission

believes that providing an incentive to incumbents to relocate

voluntarily at the same time they purchase new equipment serves the

public interest. In sum, the Commission believes that the benefits of

imposing a sunset date outweigh the burdens, if any, that such a date

may impose.

39. Finally, the Commission believes that six months is a

reasonable amount of time for most incumbents to relocate their

facilities, especially because they will have been on notice for ten

years that they might be requested to move. Nevertheless, the

Commission acknowledges that special circumstances might warrant an

extension of the six-month period in some instances to enable the

incumbent to complete relocation activities. If the incumbent is unable

to move or cannot complete relocation in time, the Commission

encourages the parties to negotiate a mutually acceptable solution. In

the event that the parties cannot agree on a schedule or an alternative

arrangement, the Commission will entertain extension requests on a

case-by-case basis. However, the Commission intends to grant such

extensions only if the incumbent can demonstrate that: (1) it cannot

relocate within the six-month period (e.g., because no alternative

spectrum or other reasonable option is available), and (2) the public

interest would be harmed if the incumbent is forced to terminate

operations (e.g., if public safety communications services would be

disrupted).

B. Cost-Sharing Plan

1. Overview

40. The Commission adopts its proposed plan with a few

modifications suggested by commenters. The Commission believes that

cost-sharing serves the public interest because (1) it will distribute

relocation costs more equitably among PCS licensees, and (2) it will

promote the relocation of entire microwave systems at once, which will

benefit microwave incumbents. The Commission also believes that cost-

sharing will accelerate the relocation process for the PCS band as a

whole, thus promoting more rapid deployment of service to the public.

Furthermore, the Commission concludes that the benefits of cost-sharing

outweigh the costs that may be incurred by licensees who become subject

to reimbursement obligations. Under the plan, these licensees will be

required to pay reimbursement obligations only when they have

benefitted from the spectrum-clearing efforts of another party.

Moreover, as discussed in greater detail below, the Commission is

adopting limits on reimbursement to ensure that licensees subject to

the plan do not bear a disproportionate cost. The Commission concludes

that these provisions amply protect the interests of such licensees.

41. Under the Commission's cost-sharing plan, a PCS licensee

obtains reimbursement rights for a particular link on the date that it

signs a relocation agreement with the microwave incumbent operating on

the link at issue. Within ten business days of the date the agreement

is signed, the PCS licensee submits documentation of the agreement to a

non-profit clearinghouse, which will be selected by the Wireless

Telecommunications Bureau (``Bureau''). If the clearinghouse has not

yet been selected, the PCS relocator will be responsible for submitting

documentation of a relocation agreement within ten business days of the

date that the Bureau announces that the clearinghouse has been

established and has begun operation.

42. Prior to commencing commercial operation, each PCS licensee is

required to send a prior coordination notification (``PCN'') to all

existing users in the area. At the same time, each PCS licensee shall

file a copy of the PCN with the clearinghouse. The clearinghouse will

then apply an objective test to determine whether the proposed base

station would have posed an interference problem to the relocated link.

If the test shows that the proposed base station is close enough to

have posed an interference problem, the clearinghouse will notify the

subsequent licensee that it is required to reimburse the PCS relocator

under the cost-sharing formula for a portion of the expenses the

relocator incurred to move the link. UTAM will be required to reimburse

PCS relocators who relocate microwave links that were operating in the

unlicensed PCS band.

43. The clearinghouse will determine the amount that the subsequent

PCS licensee must pay the relocator through the use of a cost-sharing

formula. The formula takes into consideration such factors as the

actual amount paid to relocate the link and the number of PCS licensees

that would have interfered with the link. All calculations will be done

on a per-link basis. The reimbursement amount also decreases over time

to reflect the fact that the initial PCS relocator has received the

benefit of being first to market, and to ensure that the PCS relocator

pays the largest amount, which the Commission believes will provide an

incentive to the relocator to limit relocation expenses. As an

additional protection for later-entrants, the Commission has imposed a

cap of $250,000 per link, with an additional $150,000 if a new or

modified tower is required, on the amount that a PCS relocator may

recoup for the relocation of each individual microwave link. PCS

relocators are entitled to full reimbursement, up to the cap, for

relocating non-interfering links fully outside their market area or

licensed frequency band. Also, costs that are incurred prior to the

selection of a clearinghouse will be reimbursable after a clearinghouse

is established.

44. Once a PCS licensee receives written notification from the

clearinghouse of its reimbursement obligation, it must pay the entire

amount owed within thirty calendar days, with the exception of those

small businesses that qualify for installment payments under the

Commission's auction rules. UTAM will be required to

[[Page 29687]]

reimburse a PCS relocator once a county is cleared of enough microwave

links to enable unlicensed PCS devices to operate. Because UTAM

receives its funding in small increments over an extended period of

time, UTAM will be permitted to satisfy its reimbursement obligation by

making quarterly installment payments to the PCS relocator over a

period of five years, at an interest rate of prime plus three percent.

45. The cost-sharing plan will sunset for all PCS licensees ten

years after the date that voluntary negotiations commenced for A and B

block licensees, on April 4, 2005. However, the sunset date will not

eliminate the existing obligations of PCS licensees that are paying

their portion of relocation costs on an installment basis. Those

licensees must continue their payments until the obligation is

satisfied. Finally, while the Commission concludes that the cost-

sharing plan is in the public interest, the Commission is conditioning

its adoption of these rules on approval of an entity or organization to

administer the plan. Once an administrator is selected, the cost-

sharing rules will take effect.

46. Participation in Cost-Sharing Plan. By this Report and Order,

the Commission mandates that all PCS licensees benefitting from

spectrum clearance by other PCS licensees must contribute to such

relocation costs. As the Commission emphasized in the Cost-Sharing

Notice, however, PCS licensees remain free to negotiate alternative

cost-sharing terms. The Commission also agrees with commenters that

allowing PCS licensees to enter into such private agreements serves the

public interest, because it adds flexibility to the cost-sharing

process and may enable such parties to save both time and the

administrative expense of seeking reimbursement from a clearinghouse.

The Commission therefore concludes that licensees are not required to

participate in the Commission's cost-sharing plan if they enter into

alternative cost-sharing agreements. The Commission also agrees with

commenters that all parties to a separate agreement will still be

liable under the cost-sharing plan to other PCS licensees that incur

relocation expenses. Finally, the Commission concludes that parties to

a private cost-sharing agreement may also seek reimbursement through

the clearinghouse from PCS licensees that are not parties to the

agreement.

2. Dispute Resolution Under the Cost-Sharing Plan

47. The Commission agrees with those commenters who argue that

disputes arising out of the cost-sharing plan, such as disputes over

the amount of reimbursement required, should be brought to the

clearinghouse first for resolution. At the time the dispute is brought

to the clearinghouse, the parties will be required to submit

appropriate documentation, e.g., an independent appraisal of the

equipment expenses at issue, to support their position. To the extent

that disputes cannot be resolved by the clearinghouse, the Commission

encourages parties to use expedited ADR procedures, such as binding

arbitration, mediation, or other ADR techniques. At this time, the

Commission does not designate a specific penalty for failure to comply

with cost-sharing requirements; however, the Commission emphasizes that

they intend to use the full realm of enforcement mechanisms available

to them in order to ensure that reimbursement obligations are

satisfied.

3. Administration of the Cost-Sharing Plan

48. The Commission agrees with those commenters who suggest that

the clearinghouse administrator should be selected through an open

process. The Commission also believes it is essential for the plan to

be administered by industry to the fullest extent possible. Therefore,

before the Commission implements the plan, the Commission will seek

specific proposals from parties who wish to act as administrator and

will request public comment on any such proposals.

49. The Commission delegates to the Wireless Bureau the authority

to select one or more entities to create and administer a neutral, not-

for-profit clearinghouse. Selection shall be based on criteria

established by the Bureau. The Bureau shall publicly announce the

criteria and solicit proposals from qualified parties. Once such

proposals have been received, and an opportunity has elapsed for public

comment on them, the Bureau shall make its selection. When the Bureau

selects an administrator, it shall announce the effective date of the

cost-sharing rules.

C. Licensing Issues

50. As of the effective date of the new rules, the Commission will

grant pending and newly filed applications for all major modifications

and all extensions to existing 2 GHz microwave systems on a secondary

basis. The Commission will grant primary status for the following

limited number of technical changes: decreases in power, minor changes

in antenna height, minor location changes (up to two seconds), any data

correction which does not involve a change in the location of an

existing facility, reductions in authorized bandwidths, minor changes

in structure heights, changes in ground elevation (but preserving

centerline height), and changes in equipment. All other modifications

will be permitted on a secondary basis, unless (1) the incumbent

affirmatively justifies primary status, and (2) the incumbent

establishes that the modification would not add to the relocation costs

of PCS licensees. The Commission declines to adopt the suggestion made

by PCS licensees that no modifications should be allowed even on a

secondary basis, because some incumbents might not need to relocate for

several years, and they should be permitted to make modifications to

their systems during that time period. The Commission also disagrees

with incumbents that the Commission's licensing policy should be

expanded, because the Commission believes that limiting primary site

grants is necessary to protect the interests of PCS licensees. In sum,

the Commission believes that granting secondary site authorizations

serves the public interest, because it balances existing licensees'

need to expand their systems with the goal of minimizing the number of

microwave links that PCS licensees must relocate.

51. Furthermore, the Commission clarifies that secondary operations

may not cause interference to operations authorized on a primary basis,

and they are not protected from interference from primary operations.

Thus, an incumbent operating under a secondary authorization must cease

operations if it poses an interference problem to a PCS licensee.

However, prior to commencing operations, PCS licensees are obligated to

provide all incumbents that are operating within interference range,

regardless of whether an incumbent is operating under a primary or a

secondary site authorization, with thirty days notice that they will be

commencing operations in the vicinity. Finally, PCS licensees are under

no obligation to pay to relocate secondary links that exist within

their market area and frequency block.

D. Application to Other Emerging Technology Licensees

52. The Commission agrees with AT&T that the cost-sharing plan and

rule clarifications adopted in this proceeding should apply to all

emerging technology services, including those

[[Page 29688]]

services in the 2110-2150 and 2160-2200 GHz band that have not yet been

licensed, because the microwave relocation rules already apply to all

emerging technology services. For the same reasons that these changes

will facilitate the deployment of PCS, the Commission believes these

changes will also facilitate the deployment of other emerging

technology services. For example, these changes and clarifications will

provide additional guidance and help to accelerate negotiations between

the parties. However, as new services develop, the Commission may

review its relocation rules and make modifications to these rules where

appropriate. In addition, while the Commission concludes that cost-

sharing should apply to all emerging technology services, the

Commission does not adopt specific cost-sharing rules for new services

at this time, but will develop such rules in future proceedings.

III. Conclusion

53. The Commission believes that the rules adopted in this Report

and Order will promote the public policy goals set forth by Congress.

The cost-sharing formula adopted herein will facilitate the rapid

relocation of microwave facilities operating in the 2 GHz band, and

will allow PCS licensees to offer service to the public in an

expeditious manner.

IV. Procedural Matters

A. Regulatory Flexibility Act

As required by Section 603 of the Regulatory Flexibility Act, an

Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the

Notice of Proposed Rule Making in WT Docket No. 95-157, RM-8643. The

Commission has prepared a Regulatory Flexibility Analysis of the

expected impact on small entities of the proposals suggested in this

document. Written comments were requested. The Commission's final

analysis is as follows:

Need for and purpose of the action: This rulemaking proceeding has

implemented Congress' goal of encouraging emerging technologies and

bringing innovative commercial wireless services to the public in an

efficient manner. The cost-sharing plan will promote the efficient

relocation of microwave licensees by encouraging PCS licensees to

relocate entire microwave systems rather than individual microwave

links. A cost-sharing plan is necessary to enhance the speed of

relocation and provide an incentive to PCS licensees to negotiate

system-wide relocation agreements with microwave incumbents. This

action will result in faster deployment of PCS and delivery of service

to the public. The Commission has also clarified some terminology

regarding certain aspects of the Commission's rules for microwave

relocation contained in the Commission's Emerging Technologies

proceeding, Docket No. 92-9.

Issues raised in response to the IRFA: The American Public Power

Association (``APPA'') states that conversion of 2 GHz microwave

systems to secondary status in the year 2005 would have a particularly

severe impact on the limited budgets of small, non-profit public

utility systems.

Significant alternatives considered and rejected: Although the

Commission has decided not to convert microwave incumbents to secondary

status automatically as the Commission proposed in the Cost-Sharing

Notice, microwave incumbents will be required to pay for their own

relocation costs after the sunset date. The Commission has considered

the impact of the ten year sunset date, and the Commission has

determined that the benefits of imposing a sunset date outweigh the

burdens such a date may impose on these incumbents. For further

discussion, see Section IV(A)(6), supra.

B. Paperwork Reduction Act

This First Report and Order contains either a proposed or modified

information collection. The Commission, as part of its continuing

effort to reduce paperwork burdens, invites the general public and the

Office of Management and Budget (OMB) to comment on the information

collections contained in this First Report and Order, as required by

the Paperwork Reduction Act of 1995, Public Law 104-13. Comments should

address: (a) whether the proposed collection of information is

necessary for the proper performance of the functions of the

Commission, including whether the information shall have practical

utility; (b) the accuracy of the Commission's burden estimates; (c)

ways to enhance the quality, utility and clarity of the information

collected; and (d) ways to minimize the burden of the collection of

information on the respondents, including the use of automated

collection techniques or other forms of information technology.

Further Information. For additional information concerning the

information collections contained in this Report and Order, contact

Dorothy Conway at (202) 418-0217, or via the Internet at

[email protected].

Supplementary Information:

Title: Amendment of the Commission's Rules Regarding a Plan for

Sharing the Costs of Microwave Relocation, First Report and Order.

Type of Review: Revision to existing collection.

Respondents: Personal Communications Service licensees that

relocate existing microwave operators, subsequent Personal

Communications Service applicants potentially benefitted by such

relocation, and incumbent microwave operators.

Number of Respondents: Approximately 2,000.

Estimated Time Per Response: One hour to compose, type and mail the

information to the requesting party.

Total Annual Burden: Approximately 2,000 hours.

Estimated Costs Per Respondent: Assuming that respondent uses one

attorney at $200/hour to compose, type and mail the information to the

requesting party, respondents' costs are estimated at approximately

$200 per one-time response.

Needs and Uses. The Commission recently adopted a First Report and

Order regarding a plan for sharing the costs of relocating microwave

facilities currently operating in the 1850 to 1990 MHz (2 GHz) band,

which has been allocated for use by broadband Personal Communications

Services (PCS). Amendment of the Commission's Rules Regarding a Plan

for Sharing the Costs of Microwave Relocation, First Report and Order,

adopted April 25, 1996. The First Report and Order establishes a

mechanism whereby PCS licensees that incur costs to relocate microwave

links would receive reimbursement for a portion of those costs from

other PCS licensees that also benefit from the resulting clearance of

the spectrum.

The First Report and Order concludes, inter alia, that in order for

a public safety licensee to qualify for extended negotiation periods

under the Commission's Rules, the department head responsible for

system oversight must certify to the PCS licensee requesting relocation

that:

(1) the agency is a licensee in the Police Radio, Fire Radio,

Emergency Medical, Special Emergency Radio Services, or that it is a

licensee of other Part 94 facilities licensed on a primary basis under

the eligibility requirements of Part 90, Subparts B and C; and

(2) the majority of communications carried on the facilities at

issue involve safety of life and property.

A public safety licensee must provide certification within 30 days

of a request from a PCS licensee, or the PCS licensee may presume that

special treatment is inapplicable to the incumbent.

[[Page 29689]]

In addition, the First Report and Order concludes that good faith

negotiation between parties involved in microwave relocation requires

each party to provide information to the other that is reasonably

necessary to facilitate the relocation process. For example, upon

request by a PCS licensee, the Commission expects incumbents to provide

any information that the PCS licensee needs in order to evaluate the

cost of relocating the incumbent to comparable facilities.

The legal authority for this proposed information collection

includes 47 U.S.C. Sections 154(i), 303(c), 303(f), 303(g), 303(r) and

332. The information collection would not affect any FCC Forms. The

proposed collection would increase minimally the burden on public

safety licensees seeking to qualify for an extended negotiation period

by requiring such a licensee to self-certify to the PCS licensee

requesting relocation that it is indeed a public safety licensee, and

by requiring that licensees share information in good faith.

C. Ex Parte Rules--Non-Restricted Proceeding

This is a non-restricted notice and comment rulemaking proceeding.

Ex parte presentations are permitted except during the Sunshine Agenda

period, provided they are disclosed as provided in Commission rules.

D. Authority

Authority for issuance of this Report and Order is contained in the

Communications Act, Sections 4(i), 7, 303(c), 303(f), 303(g), 303(r),

and 332, 47 U.S.C. Secs. 154(i), 157, 303(c), 303(f), 303(g), 303(r),

332, as amended.

E. Ordering Clauses

Accordingly, it is ordered that Section 15.307 is amended as set

forth below and will become effective August 12, 1996.

It is further ordered that Section 22.602 is amended as set forth

below and will become effective August 12, 1996.

It is further ordered that Sections 24.5, 24.237, 24.239. 24.241,

24.243, 24.245, 24.247, 24.249, 24.251, 24.251 and 24.253 are amended

as set forth below.

It is further ordered that the cost-sharing plan is conditioned on

approval by the Wireless Telecommunications Bureau of an entity (or

entities) to administer the plan, as described in Section IV(B)(3),

supra.

It is further ordered that Part 24 rule changes will become

applicable on the date that the Wireless Telecommunications Bureau

selects a clearinghouse to administer the cost-sharing plan. The

Commission will issue a public announcement after the selection has

been made.

It is further ordered that Sections 101.3, 101.67, 101.69, 101.71,

101.73, 101.75, 101.77, 101.79, 101.81 and 101.147, the new Part 101

(effective August 1, 1996) of the Commission's rules are amended as set

forth below and will become effective August 1, 1996.

It is further ordered that rules requiring Paperwork Reduction Act

approval shall become effective upon approval by the Office of

Management and Budget pursuant to the Paperwork Reduction Act of 1995,

Public Law No. 104-13;

It is further ordered that, as of the effective dates of the rules

listed herein, the Commission will only grant primary status to

applications for minor modifications that would not add to the

relocation costs of PCS licensees, as described in Section IV(C) supra.

It is further ordered that, as of the effective dates of the rules

listed herein, the Commission will grant applications for major

modifications and extensions to existing 2 GHz microwave systems only

on a secondary basis, as described in Section IV(C) supra.

It is further ordered that the Regulatory Flexibility Analysis, as

required by Section 604 of the Regulatory Flexibility Act, and as set

forth in Section VII(A) is adopted.

It is further ordered that the Secretary shall send a copy of this

First Report and Order to the Chief Counsel for Advocacy of the Small

Business Administration.

List of Subjects

47 CFR Part 15

Radio.

47 CFR Part 22

Radio.

47 CFR Part 24

Personal communications services.

47 CFR Part 101

Fixed microwave services.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Parts 15, 22, 24 and 101 of Chapter I of Title 47 of the Code of

Federal Regulations are amended as follows:

PART 15--RADIO FREQUENCY DEVICES

1. The authority citation for Part 15 is revised to read as

follows:

Authority: 47 U.S.C. 154, 302, 303, 304, 307 and 544A.

2. Section 15.307 is amended by revising paragraphs (a), (f) and

(g) to read as follows:

Sec. 15.307 Coordination with fixed microwave service.

(a) UTAM, Inc. is designated to coordinate and manage the

transition of the 1910-1930 MHz band from the Private Operational-Fixed

Microwave Service (OFS) operating under Part 101 of this chapter to

unlicensed PCS operations,

* * * * *

(f) At such time as the Commission deems that the need for

coordination between unlicensed PCS operations and existing Part 101

Private Operational-Fixed Microwave Services ceases to exist, the

disabling mechanism required by paragraph (e) of this section will no

longer be required.

(g) Operations under the provisions of this subpart are required to

protect systems in the Private Operational-Fixed Microwave Service

operating within the 1850-1990 MHz band until the dates and conditions

specified in Secs. 101.69 through 101.73 of this chapter for

termination of primary status. Interference protection is not required

for Part 101 stations in this band licensed on a secondary basis.

* * * * *

PART 22--PUBLIC MOBILE SERVICES

3. The authority citation for Part 22 is revised to read as

follows:

Authority: 47 U.S.C. 154, 303, unless otherwise noted.

4. Section 22.602 is revised to read as follows:

Sec. 22.602 Transition of the 2110-2130 and 2160-2180 MHz channels to

emerging technologies.

The microwave channels listed in Sec. 22.591 have been allocated

for use by emerging technologies (ET) services. No new systems will be

authorized under this part. The rules in this section provide for a

transition period during which existing Paging and Radiotelephone

Service (PARS) licensees using these channels may relocate operations

to other media or to other fixed channels, including those in other

microwave bands. For PARS licensees relocating operations to other

microwave bands, authorization must be obtained under Part 101 of this

chapter.

[[Page 29690]]

(a) Licensees proposing to implement ET services may negotiate with

PARS licensees authorized to use these channels, for the purpose of

agreeing to terms under which the PARS licensees would--

(1) Relocate their operations to other fixed microwave bands or

other media, or alternatively,

(2) Accept a sharing arrangement with the ET licensee that may

result in an otherwise impermissible level of interference to the PARS

operations.

(b) PARS operations on these channels will continue to be co-

primary with other users of this spectrum until two years after the FCC

commences acceptance of applications for ET services, and until one

year after an ET licensee initiates negotiations for relocation of the

fixed microwave licensee's operations.

(c) Voluntary Negotiations. During the two year voluntary

negotiation period, negotiations are strictly voluntary and are not

defined by any parameters. However, if the parties have not reached an

agreement within one year after the commencement of the voluntary

period, the PARS licensee must allow the ET licensee (if it so chooses)

to gain access to the existing facilities to be relocated so that an

independent third party can examine the PARS licensee's 2 GHz system

and prepare an estimate of the cost and the time needed to relocate the

PARS licensee to comparable facilities. The ET licensee must pay for

any such estimate.

(d) Mandatory Negotiations. If a relocation agreement is not

reached during the two year voluntary period, the ET licensee may

initiate a mandatory negotiation period. This mandatory period is

triggered at the option of the ET licensee, but ET licensees may not

invoke their right to mandatory negotiation until the voluntary

negotiation period has expired. Once mandatory negotiations have begun,

a PARS licensee may not refuse to negotiate and all parties are

required to negotiate in good faith. Good faith requires each party to

provide information to the other that is reasonably necessary to

facilitate the relocation process. In evaluating claims that a party

has not negotiated in good faith, the FCC will consider, inter alia,

the following factors:

(1) Whether the ET licensee has made a bona fide offer to relocate

the PARS licensee to comparable facilities in accordance with Section

101.75(b) of this chapter;

(2) If the PARS licensee has demanded a premium, the type of

premium requested (e.g., whether the premium is directly related to

relocation, such as system-wide relocations and analog-to-digital

conversions, versus other types of premiums), and whether the value of

the premium as compared to the cost of providing comparable facilities

is disproportionate (i.e., whether there is a lack of proportion or

relation between the two);

(3) What steps the parties have taken to determine the actual cost

of relocation to comparable facilities;

(4) Whether either party has withheld information requested by the

other party that is necessary to estimate relocation costs or to

facilitate the relocation process. Any party alleging a violation of

our good faith requirement must attach an independent estimate of the

relocation costs in question to any documentation filed with the

Commission in support of its claim. An independent cost estimate must

include a specification for the comparable facility and a statement of

the costs associated with providing that facility to the incumbent

licensee.

(e) Involuntary period. After the periods specified in paragraph

(b) of this section have expired, ET licensees may initiate involuntary

relocation procedures under the Commission's rules. ET licensees are

obligated to pay to relocate only the specific microwave links to which

their systems pose an interference problem. Under involuntary

relocation, a PARS licensee is required to relocate, provided that:

(1) The ET applicant, provider, licensee or representative

guarantees payment of relocation costs, including all engineering,

equipment, site and FCC fees, as well as any legitimate and prudent

transaction expenses incurred by the PARS licensee that are directly

attributable to an involuntary relocation, subject to a cap of two

percent of the hard costs involved. Hard costs are defined as the

actual costs associated with providing a replacement system, such as

equipment and engineering expenses. ET licensees are not required to

pay PARS licensees for internal resources devoted to the relocation

process. ET licensees are not required to pay for transaction costs

incurred by PARS licensees during the voluntary or mandatory periods

once the involuntary period is initiated or for fees that cannot be

legitimately tied to the provision of comparable facilities;

(2) The ET applicant, provider, licensee or representative

completes all activities necessary for implementing the replacement

facilities, including engineering and cost analysis of the relocation

procedure and, if radio facilities are involved, identifying and

obtaining, on the incumbents behalf, new channels and frequency

coordination; and,

(3) The ET applicant, provider, licensee or representative builds

the replacement system and tests it for comparability with the existing

2 GHz system.

(f) Comparable Facilities. The replacement system provided to an

incumbent during an involuntary relocation must be at least equivalent

to the existing PARS system with respect to the following three

factors:

(1) Throughput. Communications throughput is the amount of

information transferred within a system in a given amount of time. If

analog facilities are being replaced with analog, the ET licensee is

required to provide the PARS licensee with an equivalent number of 4

kHz voice channels. If digital facilities are being replaced with

digital, the ET licensee must provide the PARS licensee with equivalent

data loading bits per second (bps). ET licensees must provide PARS

licensees with enough throughput to satisfy the PARS licensee's system

use at the time of relocation, not match the total capacity of the PARS

system.

(2) Reliability. System reliability is the degree to which

information is transferred accurately within a system. ET licensees

must provide PARS licensees with reliability equal to the overall

reliability of their system. For digital data systems, reliability is

measured by the percent of time the bit error rate (BER) exceeds a

desired value, and for analog or digital voice transmissions, it is

measured by the percent of time that audio signal quality meets an

established threshold. If an analog voice system is replaced with a

digital voice system, only the resulting frequency response, harmonic

distortion, signal-to-noise ratio and its reliability will be

considered in determining comparable reliability.

(3) Operating Costs. Operating costs are the cost to operate and

maintain the PARS system. ET licensees must compensate PARS licensees

for any increased recurring costs associated with the replacement

facilities (e.g. additional rental payments, increased utility fees)

for five years after relocation. ET licensees may satisfy this

obligation by making a lump-sum payment based on present value using

current interest rates. Additionally, the maintenance costs to the PARS

licensee must be equivalent to the 2 GHz system in order for the

replacement system to be considered comparable.

(g) The PARS licensee is not required to relocate until the

alternative facilities are available to it for a reasonable time to

make adjustments, determine

[[Page 29691]]

comparability, and ensure a seamless handoff.

(h) The Commission's Twelve-Month Trial Period. If, within one year

after the relocation to new facilities, the PARS licensee demonstrates

that the new facilities are not comparable to the former facilities,

the ET applicant, provider, licensee or representative must remedy the

defects or pay to relocate the PARS licensee to one of the following:

its former or equivalent 2 GHz channels, another comparable frequency

band, a land-line system, or any other facility that satisfies the

requirements specified in paragraph (f) of this section. This trial

period commences on the date that the PARS licensee begins full

operation of the replacement link. If the PARS licensee has retained

its 2 GHz authorization during the trial period, it must return the

license to the Commission at the end of the twelve months.

(i) After April 25, 1996, all major modifications and extensions to

existing PARS systems operating on channels in the 2110-2130 and 2160-

2180 MHz bands will be authorized on a secondary basis to future ET

operations. All other modifications will render the modified PARS

license secondary to future ET operations unless the incumbent

affirmatively justifies primary status and the incumbent PARS licensee

establishes that the modification would not add to the relocation costs

of ET licensees. Incumbent PARS licensees will maintain primary status

for the following technical changes:

(1) Decreases in power;

(2) Minor changes (increases or decreases) in antenna height;

(3) Minor location changes (up to two seconds);

(4) Any data correction which does not involve a change in the

location of an existing facility;

(5) Reductions in authorized bandwidth;

(6) Minor changes (increases or decreases) in structure height;

(7) Changes (increases or decreases) in ground elevation that do

not affect centerline height;

(8) Minor equipment changes.

(j) Sunset. PARS licensees will maintain primary status in the

2110-2130 and 2160-2180 MHz bands unless and until an ET licensee

requires use of the spectrum. ET licensees are not required to pay

relocation costs after the relocation rules sunset (i.e. ten years

after the voluntary period begins for the first ET licensees in the

service). Once the relocation rules sunset, an ET licensee may require

the incumbent to cease operations, provided that the ET licensee

intends to turn on a system within interference range of the incumbent,

as determined by TIA Bulletin 10-F or any standard successor. ET

licensee notification to the affected PARS licensee must be in writing

and must provide the incumbent with no less than six months to vacate

the spectrum. After the six-month notice period has expired, the PARS

licensee must turn its license back into the Commission, unless the

parties have entered into an agreement which allows the PARS licensee

to continue to operate on a mutually agreed upon basis. If the parties

cannot agree on a schedule or an alternative arrangement, requests for

extension will be accepted and reviewed on a case-by-case basis. The

Commission will grant such extensions only if the incumbent can

demonstrate that:

(1) It cannot relocate within the six-month period (e.g., because

no alternative spectrum or other reasonable option is available), and;

(2) The public interest would be harmed if the incumbent is forced

to terminate operations (e.g., if public safety communications services

would be disrupted).

PART 24--PERSONAL COMMUNICATIONS SERVICES

5. The authority citation for Part 24 is revised to read as

follows:

Authority: 47 U.S.C. 154, 301, 302, 303, 309 and 332.

6. Section 24.5 is amended by adding the definitions for ``PCS

Relocator'' and ``UTAM'' in alphabetical order to read as follows:

Sec. 24.5 Definitions.

* * * * *

PCS Relocator. A PCS entity that pays to relocate a fixed microwave

link from its existing 2 GHz facility to other media or other fixed

channels.

UTAM. The Unlicensed PCS Ad Hoc Committee for 2 GHz Microwave

Transition and Management, which coordinates relocation in the 1910-

1930 MHz band.

* * * * *

7. Section 24.237 is amended by revising paragraph (c) to read as

follows:

Sec. 24.237 Interference protection.

* * * * *

(c) In all other respects, coordination procedures are to follow

the requirements of Sec. 101.103(d) of this chapter to the extent that

these requirements are not inconsistent with those specified in this

part.

* * * * *

8. Subpart E is amended by adding a new heading following Section

24.238 to read as follows:

Policies Governing Microwave Relocation From the 1850-1990 MHz Band

9. A new Section 24.239 is added to Subpart E to read as follows:

Sec. 24.239 Cost-sharing requirements for Broadband PCS.

Frequencies in the 1850-1990 MHz band listed in Sec. 101.147(c) of

this chapter have been allocated for use by PCS. In accordance with

procedures specified in Secs. 101.69 through 101.81 of this chapter,

PCS entities (both licensed and unlicensed) are required to relocate

the existing Fixed Microwave Services (FMS) licensees in these bands if

interference to the existing FMS operations would occur. All PCS

entities who benefit from spectrum clearance by other PCS entities must

contribute to such relocation costs. PCS entities may satisfy this

requirement by entering into private cost-sharing agreements or

agreeing to terms other than those specified in Sec. 24.243. However,

PCS entities are required to reimburse other PCS entities that incur

relocation costs and are not parties to the alternative agreement. In

addition, parties to a private cost-sharing agreement may seek

reimbursement through the clearinghouse (as discussed in Sec. 24.241)

from PCS entities that are not parties to the agreement. The cost-

sharing plan is in effect during all phases of microwave relocation

specified in Sec. 101.69 of this chapter.

10. A new Section 24.241 is added to Subpart E to read as follows:

Sec. 24.241 Administration of the Cost-Sharing Plan.

The Wireless Telecommunications Bureau, under delegated authority,

will select an entity to operate as a neutral, not-for-profit

clearinghouse. This clearinghouse will administer the cost-sharing plan

by, inter alia, maintaining all of the cost and payment records related

to the relocation of each link and determining the cost-sharing

obligation of subsequent PCS entities. The cost-sharing rules will not

take effect until an administrator is selected.

11. A new Section 24.243 is added to Subpart E to read as follows:

[[Page 29692]]

Sec. 24.243 The Cost-Sharing Formula.

A PCS relocator who relocates an interfering microwave link, i.e.,

one that is in all or part of its market area and in all or part of its

frequency band, is entitled to pro rata reimbursement based on the

following formula:

[GRAPHIC] [TIFF OMITTED] TR12JN96.001

(a) RN equals the amount of reimbursement.

(b) C equals the actual cost of relocating the link. Actual

relocation costs include, but are not limited to, such items as: radio

terminal equipment (TX and/or RX--antenna, necessary feed lines, MUX/

Modems); towers and/or modifications; back-up power equipment;

monitoring or control equipment; engineering costs (design/path

survey); installation; systems testing; FCC filing costs; site

acquisition and civil works; zoning costs; training; disposal of old

equipment; test equipment (vendor required); spare equipment; project

management; prior coordination notification under Sec. 101.103(d) of

this chapter; required antenna upgrades for interference control; power

plant upgrade (if required); electrical grounding systems; Heating

Ventilation and Air Conditioning (HVAC) (if required); alternate

transport equipment; and leased facilities. C also includes incumbent

transaction expenses that are directly attributable to the relocation,

subject to a cap of two percent of the ``hard'' costs involved. C may

not exceed $250,000 per link, with an additional $150,000 permitted if

a new or modified tower is required.

(c) N equals the number of PCS entities that would have interfered

with the link. For the PCS relocator, N = 1. For the next PCS entity

that would have interfered with the link, N=2, and so on.

(d) TM equals the number of months that have elapsed between

the month the PCS relocator obtains reimbursement rights and the month

that the clearinghouse notifies a later-entrant of its reimbursement

obligation. A PCS relocator obtains reimbursement rights on the date

that it signs a relocation agreement with a microwave incumbent.

12. A new Section 24.245 is added to Subpart E to read as follows:

Sec. 24.245 Reimbursement under the Cost-Sharing Plan.

(a) Registration of Reimbursement Rights. To obtain reimbursement,

a PCS relocator must submit documentation of the relocation agreement

to the clearinghouse within ten business days of the date a relocation

agreement is signed with an incumbent. If the clearinghouse has not yet

been selected, the PCS relocator will be responsible for submitting

documentation of the relocation agreement within ten business days of

the date that the Wireless Telecommunications Bureau issues a public

notice announcing that the clearinghouse has been established and has

begun operation.

(b) Documentation of Expenses. Once relocation occurs, the PCS

relocator must submit documentation itemizing the amount spent for

items listed in Sec. 24.243(b). The PCS relocator must identify the

particular link associated with appropriate expenses (i.e., costs may

not be averaged over numerous links). If a PCS relocator pays a

microwave incumbent a monetary sum to relocate its own facilities, the

PCS relocator must estimate the costs associated with relocating the

incumbent by itemizing the anticipated cost for items listed in

Sec. 24.243(b). If the sum paid to the incumbent cannot be accounted

for, the remaining amount is not eligible for reimbursement. A PCS

relocator may submit receipts or other documentation to the

clearinghouse for all relocation expenses incurred since April 5, 1995.

(c) Full Reimbursement. A PCS relocator who relocates a microwave

link that is either fully outside its market area or its licensed

frequency band may seek full reimbursement through the clearinghouse of

compensable costs, up to the reimbursement cap as defined in

Sec. 24.243(b). Such reimbursement will not be subject to depreciation

under the cost-sharing formula.

13. A new Section 24.247 is added to Subpart E to read as follows:

Sec. 24.247 Triggering a Reimbursement Obligation.

(a) Licensed PCS. The clearinghouse will apply the following test

to determine if a PCS entity preparing to initiate operations must pay

a PCS relocator in accordance with the formula detailed in Sec. 24.243:

(1) All or part of the relocated microwave link was initially co-

channel with the licensed PCS band(s) of the subsequent PCS entity;

(2) A PCS relocator has paid the relocation costs of the microwave

incumbent; and

(3) The subsequent PCS entity is preparing to turn on a fixed base

station at commercial power and the fixed base station is located

within a rectangle (Proximity Threshold) described as follows:

(i) The length of the rectangle shall be x where x is a line

extending through both nodes of the microwave link to a distance of 48

kilometers (30 miles) beyond each node. The width of the rectangle

shall be y where y is a line perpendicular to x and extending for a

distance of 24 kilometers (15 miles) on both sides of x. Thus, the

rectangle is represented as follows:

BILLING CODE 6712-01-P

[GRAPHIC] [TIFF OMITTED] TR12JN96.002

BILLING CODE 6712-01-C

[[Page 29693]]

(ii) If the application of the Proximity Threshold test indicates

that a reimbursement obligation exists, the clearinghouse will

calculate the reimbursement amount in accordance with the cost-sharing

formula and notify the subsequent PCS entity of the total amount of its

reimbursement obligation.

(b) Unlicensed PCS. UTAM's reimbursement obligation is triggered

either:

(1) When a county is cleared of microwave links in the unlicensed

allocation, and UTAM invokes a Zone 1 power cap as a result of third

party relocation activities; or

(2) A county is cleared of microwave links in the unlicensed

allocation and UTAM reclassifies a Zone 2 county to Zone 1 status.

14. A new Section 24.249 is added to Subpart E to read as follows:

Sec. 24.249 Payment Issues.

(a) Timing. On the day that a PCS entity files its prior

coordination notice (PCN) in accordance with Sec. 101.103(d) of this

chapter, it must file a copy of the PCN with the clearinghouse. The

clearinghouse will determine if any reimbursement obligation exists and

notify the PCS entity in writing of its repayment obligation, if any.

When the PCS entity receives a written copy of such obligation, it must

pay directly to the PCS relocator the amount owed within thirty days,

with the exception of those businesses that qualify for installment

payments. A business that qualifies for an installment payment plan

must make its first installment payment within thirty days of notice

from the clearinghouse. UTAM's first payment will be due thirty days

after its reimbursement obligation is triggered as described in

Sec. 24.247(b).

(b) Eligibility for Installment Payments. PCS licensees that are

allowed to pay for their licenses in installments under our designated

entity rules will have identical payment options available to them with

respect to payments under the cost-sharing plan. The specific terms of

the installment payment mechanism, including the treatment of principal

and interest, are the same as those applicable to the licensee's

installment auction payments. If, for any reason, the entity eligible

for installment payments is no longer eligible for such installment

payments on its license, that entity is no longer eligible for

installment payments under the cost-sharing plan. UTAM may make

quarterly payments over a five-year period with an interest rate of

prime plus 2.5 percent. UTAM may also negotiate separate repayment

arrangements with other parties.

15. A new Section 24.251 is added to Subpart E to read as follows:

Sec. 24.251 Dispute Resolution Under the Cost-Sharing Plan.

Disputes arising out of the cost-sharing plan, such as disputes

over the amount of reimbursement required, must be brought, in the

first instance, to the clearinghouse for resolution. To the extent that

disputes cannot be resolved by the clearinghouse, parties are

encouraged to use expedited ADR procedures, such as binding

arbitration, mediation, or other ADR techniques.

16. A new Section 24.253 is added to Subpart E to read as follows:

Sec. 24.253 Termination of Cost-Sharing Obligations.

The cost-sharing plan will sunset for all PCS entities on April 4,

2005, which is ten years after the date that voluntary negotiations

commenced for A and B block PCS entities. Those PCS entities that are

paying their portion of relocation costs on an installment basis must

continue the payments until the obligation is satisfied.

PART 101--FIXED MICROWAVE SERVICES

17. The authority citation for Part 101 is revised to read as

follows:

Authority: 47 U.S.C. 154, 303.

18. Section 101.3 is amended by adding the definition for

``Secondary Operations'' in alphabetical order to read as follows:

Sec. 101.3 Definitions.

* * * * *

Secondary Operations. Radio communications which may not cause

interference to operations authorized on a primary basis and which are

not protected from interference from these primary operations.

* * * * *

19. Subpart B is amended by adding a new heading following Section

101.67 to read as follows:

Policies Governing Microwave Relocation From the 1850-1990 and

2110-2200 MHZ Bands

20. Section 101.69 is revised to read as follows:

Sec. 101.69 Transition of the 1850-1990 and 2110-2200 MHz bands from

the Fixed Microwave Services to Personal Communications Services and

emerging technologies.

Fixed Microwave Services (FMS) frequencies in the 1850-1990 and

2110-2200 MHz bands listed in Secs. 101.147 (c), (d) and (e) have been

allocated for use by emerging technology (ET) services, including

Personal Communications Services (PCS). The rules in this section

provide for a transition period during which ET licensees may relocate

existing FMS licensees using these frequencies to other media or other

fixed channels, including those in other microwave bands.

(a) ET licensees may negotiate with FMS licensees authorized to use

frequencies in the 1850-1990 and 2110-2200 MHz bands, for the purpose

of agreeing to terms under which the FMS licensees would--

(1) Relocate their operations to other fixed microwave bands or

other media; or alternatively

(2) Accept a sharing arrangement with the ET licensee that may

result in an otherwise impermissible level of interference to the FMS

operations.

(b) FMS operations in the 1850-1990 and 2110-2200 MHz bands, with

the exception of public safety facilities defined in Sec. 101.77, will

continue to be co-primary with other users of this spectrum until two

years after the FCC commences acceptance of applications for ET

services (voluntary negotiation period), and until one year after an ET

licensee initiates negotiations for relocation of the fixed microwave

licensee's operations (mandatory negotiation period). In the 1910-1930

MHz band allocated for unlicensed PCS, FMS operations will continue to

be co-primary until one year after UTAM, Inc. initiates negotiations

for relocation of the fixed microwave licensee's operations. Public

safety facilities defined in Sec. 101.77 will continue to be co-primary

in these bands until three years after the Commission commences

acceptance of applications for an emerging technology service

(voluntary negotiation period), and until two years after an emerging

technology service licensee or an emerging technology unlicensed

equipment supplier or representative initiates negotiations for

relocation of the fixed microwave licensee's operations (mandatory

negotiation period). If no agreement is reached during either the

voluntary or mandatory negotiation periods, an ET licensee may initiate

involuntary relocation procedures. Under involuntary relocation, the

incumbent is required to relocate, provided that the ET licensee meets

the conditions of Sec. 101.75.

21. A new Section 101.71 is added to Subpart B to read as follows:

[[Page 29694]]

Sec. 101.71 Voluntary Negotiations.

During the two or three year voluntary negotiation period,

negotiations are strictly voluntary and are not defined by any

parameters. However, if the parties have not reached an agreement

within one year after the commencement of the voluntary period, the FMS

licensee must allow the ET licensee (if it so chooses) to gain access

to the existing facilities to be relocated so that an independent third

party can examine the FMS licensee's 2 GHz system and prepare an

estimate of the cost and the time needed to relocate the FMS licensee

to comparable facilities. The ET licensee must pay for any such

estimate.

22. A new Section 101.73 is added to Subpart B to read as follows:

Sec. 101.73 Mandatory Negotiations.

(a) If a relocation agreement is not reached during the two or

three year voluntary period, the ET licensee may initiate a mandatory

negotiation period. This mandatory period is triggered at the option of

the ET licensee, but ET licensees may not invoke their right to

mandatory negotiation until the voluntary negotiation period has

expired.

(b) Once mandatory negotiations have begun, an FMS licensee may not

refuse to negotiate and all parties are required to negotiate in good

faith. Good faith requires each party to provide information to the

other that is reasonably necessary to facilitate the relocation

process. In evaluating claims that a party has not negotiated in good

faith, the FCC will consider, inter alia, the following factors:

(1) Whether the ET licensee has made a bona fide offer to relocate

the FMS licensee to comparable facilities in accordance with Section

101.75(b);

(2) If the FMS licensee has demanded a premium, the type of premium

requested (e.g., whether the premium is directly related to relocation,

such as system-wide relocations and analog-to-digital conversions,

versus other types of premiums), and whether the value of the premium

as compared to the cost of providing comparable facilities is

disproportionate (i.e., whether there is a lack of proportion or

relation between the two);

(3) What steps the parties have taken to determine the actual cost

of relocation to comparable facilities;

(4) Whether either party has withheld information requested by the

other party that is necessary to estimate relocation costs or to

facilitate the relocation process.

(c) Any party alleging a violation of our good faith requirement

must attach an independent estimate of the relocation costs in question

to any documentation filed with the Commission in support of its claim.

An independent cost estimate must include a specification for the

comparable facility and a statement of the costs associated with

providing that facility to the incumbent licensee.

23. A new Section 101.75 is added to Subpart B to read as follows:

Sec. 101.75 Involuntary Relocation Procedures.

(a) If no agreement is reached during either the voluntary or

mandatory negotiation period, an ET licensee may initiate involuntary

relocation procedures under the Commission's rules. ET licensees are

obligated to pay to relocate only the specific microwave links to which

their systems pose an interference problem. Under involuntary

relocation, the FMS licensee is required to relocate, provided that the

ET licensee:

(1) Guarantees payment of relocation costs, including all

engineering, equipment, site and FCC fees, as well as any legitimate

and prudent transaction expenses incurred by the FMS licensee that are

directly attributable to an involuntary relocation, subject to a cap of

two percent of the hard costs involved. Hard costs are defined as the

actual costs associated with providing a replacement system, such as

equipment and engineering expenses. ET licensees are not required to

pay FMS licensees for internal resources devoted to the relocation

process. ET licensees are not required to pay for transaction costs

incurred by FMS licensees during the voluntary or mandatory periods

once the involuntary period is initiated, or for fees that cannot be

legitimately tied to the provision of comparable facilities;

(2) Completes all activities necessary for implementing the

replacement facilities, including engineering and cost analysis of the

relocation procedure and, if radio facilities are used, identifying and

obtaining, on the incumbents' behalf, new microwave frequencies and

frequency coordination; and

(3) Builds the replacement system and tests it for comparability

with the existing 2 GHz system.

(b) Comparable Facilities. The replacement system provided to an

incumbent during an involuntary relocation must be at least equivalent

to the existing FMS system with respect to the following three factors:

(1) Throughput. Communications throughput is the amount of

information transferred within a system in a given amount of time. If

analog facilities are being replaced with analog, the ET licensee is

required to provide the FMS licensee with an equivalent number of 4 kHz

voice channels. If digital facilities are being replaced with digital,

the ET licensee must provide the FMS licensee with equivalent data

loading bits per second (bps). ET licensees must provide FMS licensees

with enough throughput to satisfy the FMS licensee's system use at the

time of relocation, not match the total capacity of the FMS system.

(2) Reliability. System reliability is the degree to which

information is transferred accurately within a system. ET licensees

must provide FMS licensees with reliability equal to the overall

reliability of their system. For digital data systems, reliability is

measured by the percent of time the bit error rate (BER) exceeds a

desired value, and for analog or digital voice transmissions, it is

measured by the percent of time that audio signal quality meets an

established threshold. If an analog voice system is replaced with a

digital voice system, only the resulting frequency response, harmonic

distortion, signal-to-noise ratio and its reliability will be

considered in determining comparable reliability.

(3) Operating Costs. Operating costs are the cost to operate and

maintain the FMS system. ET licensees must compensate FMS licensees for

any increased recurring costs associated with the replacement

facilities (e.g., additional rental payments, increased utility fees)

for five years after relocation. ET licensees may satisfy this

obligation by making a lump-sum payment based on present value using

current interest rates. Additionally, the maintenance costs to the FMS

licensee must be equivalent to the 2 GHz system in order for the

replacement system to be considered comparable.

(c) The FMS licensee is not required to relocate until the

alternative facilities are available to it for a reasonable time to

make adjustments, determine comparability, and ensure a seamless

handoff.

(d) Twelve-Month Trial Period. If, within one year after the

relocation to new facilities, the FMS licensee demonstrates that the

new facilities are not comparable to the former facilities, the ET

licensee must remedy the defects or pay to relocate the microwave

licensee to one of the following: its former or equivalent 2 GHz

channels, another comparable frequency band, a land-line system, or any

other facility that satisfies the requirements specified in paragraph

(b) of this section. This trial period commences on the date that the

FMS licensee begins full operation of the replacement link. If the FMS

licensee has retained its 2 GHz

[[Page 29695]]

authorization during the trial period, it must return the license to

the Commission at the end of the twelve months.

24. A new Section 101.77 is added to Subpart B to read as follows:

Sec. 101.77 Public Safety Licensees in the 1850-1990 and 2110-2200 MHz

bands.

(a) Public safety facilities are subject to the three-year

voluntary and two-year mandatory negotiation period. In order for

public safety licensees to qualify for extended negotiation periods,

the department head responsible for system oversight must certify to

the ET licensee requesting relocation that:

(1) The agency is a licensee in the Police Radio, Fire Radio,

Emergency Medical, Special Emergency Radio Services, or that it is a

licensee of other Part 101 facilities licensed on a primary basis under

the eligibility requirements of Part 90, Subparts B and C of this

chapter; and

(2) The majority of communications carried on the facilities at

issue involve safety of life and property.

(b) A public safety licensee must provide certification within

thirty (30) days of a request from a ET licensee, or the ET licensee

may presume that special treatment is inapplicable. If a public safety

licensee falsely certifies to an ET licensee that it qualifies for the

extended time periods, this licensee will be in violation of the

Commission's rules and will subject to appropriate penalties, as well

as immediately subject to the non-public safety time periods.

25. A new Section 101.79 is added to Subpart B to read as follows:

Sec. 101.79 Sunset provisions for licensees in the 1850-1990 and 2110-

2200 MHz bands.

(a) FMS licensees will maintain primary status in the 1850-1990 and

2110-2200 MHz bands unless and until an ET licensee requires use of the

spectrum. ET licensees are not required to pay relocation costs after

the relocation rules sunset (i.e. ten years after the voluntary period

begins for the first ET licensees in the service). Once the relocation

rules sunset, an ET licensee may require the incumbent to cease

operations, provided that the ET licensee intends to turn on a system

within interference range of the incumbent, as determined by TIA

Bulletin 10-F or any standard successor. ET licensee notification to

the affected FMS licensee must be in writing and must provide the

incumbent with no less than six months to vacate the spectrum. After

the six-month notice period has expired, the FMS licensee must turn its

license back into the Commission, unless the parties have entered into

an agreement which allows the FMS licensee to continue to operate on a

mutually agreed upon basis.

(b) If the parties cannot agree on a schedule or an alternative

arrangement, requests for extension will be accepted and reviewed on a

case-by-case basis. The Commission will grant such extensions only if

the incumbent can demonstrate that:

(1) It cannot relocate within the six-month period (e.g., because

no alternative spectrum or other reasonable option is available), and;

(2) The public interest would be harmed if the incumbent is forced

to terminate operations (e.g., if public safety communications services

would be disrupted).

26. A new Section 101.81 is added to Subpart B to read as follows:

Sec. 101.81 Future licensing in the 1850-1990 and 2110-2200 MHz bands.

After April 25, 1996, all major modifications and extensions to

existing FMS systems in the 1850-1990 and 2110-2200 MHz bands will be

authorized on a secondary basis to ET systems. All other modifications

will render the modified FMS license secondary to ET operations, unless

the incumbent affirmatively justifies primary status and the incumbent

FMS licensee establishes that the modification would not add to the

relocation costs of ET licensees. Incumbent FMS licensees will maintain

primary status for the following technical changes:

(a) Decreases in power;

(b) Minor changes (increases or decreases) in antenna height;

(c) Minor location changes (up to two seconds);

(d) Any data correction which does not involve a change in the

location of an existing facility;

(e) Reductions in authorized bandwidth;

(f) Minor changes (increases or decreases) in structure height;

(g) Changes (increases or decreases) in ground elevation that do

not affect centerline height;

(h) Minor equipment changes.

27. Section 101.147 is amended by adding references to note 20 in

the entries for frequency ranges 1,850-1,990, 2,130-2,150, 2,150-2,160

and 2,180-2,200 MHz and revising note 20 to read as follows:

Sec. 101.147 Frequency assignments.

(a) * * *

1,850-1,990 MHz (20)

* * * * *

2,130-2,150 MHz (20) (22)

2,150-2,160 MHz (20), (22)

* * * * *

2,180-2,200 MHz (20), (22)

* * * * *

Notes

* * * * *

(20) New facilities in these bands will be licensed only on a

secondary basis. Facilities licensed or applied for before January

16, 1992, are permitted to make modifications and minor extensions

in accordance with Sec. 101.77 and still retain primary status.

* * * * *

(22) Frequencies in these bands are for the exclusive use of

Private Operational Fixed Point-to-Point Microwave Service (Part

101).

[FR Doc. 96-14138 Filed 6-11-96; 8:45 am]

BILLING CODE 6712-01-P